By FXEmpire.com
The gold markets continues to grind lower overall, but the session on Monday showed some signs of support late in the day. The daily candle for the session formed a hammer, which of course is a bullish sign. The $1,650 level held as support for the session, and it now looks as if the market wants to rise.
The $1,680 level will have to be overcome in order to make a new high, but the market looks posed to do just this. The $1,700 level above could be resistive yet again, so while we are bullish of the gold markets overall, it does look like this could be a bit more of a grind than a shot straight up. This is a market that can find a reason to melt up or melt down at the drop of a hat, due mainly to the fact that it is a small market, so we need to be vigilant in any trades in this market at the moment. There is also a downtrend line that coincides with the $1,680 area as well, so this bodes especially well for the idea of a move higher being a breakout if we get above that level.
The fundamentals are still bullish for gold over the long run as the central banks are still net buyers, and they are also easing their monetary policies as well. This should continue to push the demand for “hard assets” going forward for the long term, and gold is one of the trading world’s favorite ways to play the fiat currency fears globally.
The hammer that formed for the day does suggest that there are more traders coming into the markets in order to support gold, and if we get above the trend line that we mentioned earlier, there is a real chance that we see $1,800 before it is all said and done. Selling isn’t a thought until we are sub-$1,500 on a daily close as the last decade has seen several pullbacks like this, and has continued to climb higher over that time if given a chance.
Gold Forecast April 17, 2012, Technical Analysis
Originally posted here
